What to do with my profit sharing?

[Ron]

I left my job and have a substantial amount of money in profit sharing.

Currently I also have some IRAs that have done OK. I am not very skilled nor interested in playing the market timing game. I bought some funds and basically held them.

What route would you suggest for someone who is in my position?

I have been toying with the idea of putting it in an annuity. This goes against a lot of what I have read over the years. Yet I am realistic enough to know myself, I'm not going to turn into "investment guy".

Any thoughts?

[K Frame]

A lot of what you do with it will depend on your age, your years until retirement, whether or not it's already considered to be retirement funds (tax implications), how much risk you're willing to take, and other factors.

The IRAs are definitely retirement funds, but are you looking at consolidating them together into one vehicle?

Without knowing even those basics, I don't think anyone could, or should, try to give you anything more than the most general advice.

[Ron]

Age 42

IRAs are still traditional not Roths.

Profit sharing is all non taxable until I start withdrawing.

Totals breakdown like this, 75% is in profit sharing, 25% is in traditional IRAs and the rest is in "cash".

I guess my question is, is putting it all into an annuity a horrible decision?

[280plus]

Send it to me so I can pay my taxes? 

[charby]

Ron

Best thing to do is go see a few finacial planners with a couple of the big well known companies, AG Edwards, Ameriprise, etc*. Don't see one guy at one company try and talk with at least three folks and they hopefully will be able to help you take what you have and plan for retirement. Pick the person you're happiest with.

-Charby

* I'm not endorsing these companies, first ones that came to mind.

[wmenorr67]

It is called profit sharing, so share it. 

[Ben]

For someone in your position, I highly recommend going to Vanguard.com and doing some research there on the various blended funds, such as the Vanguard Total Market and Wellesly Blended Funds. Also their blended retirement vehicles, I forget what they're called, but the names are similar to when you plan to retire (i.e., 10 year, 20 year, etc.). These funds are more aggressive the farther out you are from retirement, and more conservative the closer to hanging out the "gone fishin" sign you are.

[Northwoods]

Umm, how much debt (car loans, student loans, credit cards, 2nd mortgages, etc) do you have.  I'd probably work on paying them off first before investing.  If you are debt free, I'll second the opinion to find a good financial advisor.  I'd recommend going to www.daveramsey.com and go the section on ELP's (Endorsed Local Providers) and put in a request to be referred to one in your area.

[280plus]

On the Vanguard look at VEIEX. It has been performing nicely. It is a very aggressive fund though so if you can handle the roller coaster ride it should do well for the future.

[K Frame]

Age 42

IRAs are still traditional not Roths.

Profit sharing is all non taxable until I start withdrawing.

Totals breakdown like this, 75% is in profit sharing, 25% is in traditional IRAs and the rest is in "cash".

I guess my question is, is putting it all into an annuity a horrible decision?

Before you make ANY move you need to talk to a financial advisor about what you can, and can't, do in regards to avoiding a big IRS tax and penalty hit.

I know more than one person who didn't handle rollovers like this properly and ended up getting borehogged because of it.

I would also suggest Vanguard. Of all of my mutual fund companies (currently Vanguard, Fidelity, Janus, and Schwab) the Vanguard funds are, as a whole, performing better than any of the others.

[Jamisjockey]

&




(Strippers and booze)

[thebaldguy]

Dig the strippers and booze idea...lol

Unless you need the money right now to survive, I recommend doing a direct rollover to a regular IRA. If you take the money to yourself, you will have to claim it as income AND you will have to pay a 10% premature penalty. There may even be 20% taxes withheld from your check before you get it.

Don't buy an annuity; you can do better with some mutual funds. Find some no load (no sales fee charge) with some decent returns. You will have to do some homework. Check out Morningstar for some fund ideas. Consumer Reports review funds as well. Listen to the Mutual Fund Show on radio if it's available in your area.

[Ron]

As of this point I have only spoke with one adviser.

He is the one that is recommending the annuity.

My lack of diligence in paying attention to the 25% I have in no load mutual funds has led him to suggest something a little more managed.

My IRA funds haven't done bad, most of the money is in a Vanguard total stock market index fund that mimics the Wilshire 5000 and in Kaufman Fund.

When he asked me how much I had in them I didn't really know, I have been a little distracted these last two years hating my job and all and stopped paying attention.

They could be rolled into the annuity with no tax liabilities.

There is no hurry to do anything so I guess I will investigate a little more.

I'm just leery of an annuity and thought I would throw it out there.

[BozemanMT]

Before you make ANY move you need to talk to a financial advisor about what you can, and can't, do in regards to avoiding a big IRS tax and penalty hit.

I know more than one person who didn't handle rollovers like this properly and ended up getting borehogged because of it.

+1000000000000
Don't screw this up, it's huge.
companies do this all the time, let them walk you thru it.

BTW, I'd put it in a retirement fund (you know, retirement 2025) and let it sit.

[thebaldguy]

Remember that he or she makes a nice commission from an annuity. Check out what Suzy Orman and other financial folks have to say about annuities before you invest in one.

[K Frame]

Remember that he or she makes a nice commission from an annuity. Check out what Suzy Orman and other financial folks have to say about annuities before you invest in one.

Bingo.

Exactly what I was going to say.

Also, look at the rate of return on the annuity. Many of them are.... blah.

You might want to see if Vanguard offers a retirement fund based on their Life Growth series of investment portfolios. Those are available to me via my employer. They're not the greatest earners in the world, but they're safe and they're well diversified.

[280plus]

Yea, I've had a bit of that Vanguard total stock market fund for a while myself. It's done OK. My uncle the stockbroker keeps telling me to leave the money in there. "You still have that total Stock Market? Keep that money in there they are still touting that fund." I've never really known exactly who "they" are to be honest. 

[K Frame]

"I've never really known exactly who "they" are to be honest."

It took me decades to figure it out, but I finally solved the riddle of who "they" is...

Herschel and Naomi Schwartzenstein of Brooklyn, NY.

[280plus]

Oh, THAT they... 

[RJMcElwain]

Since annuities are tax deferred investments, there's no sense in buying an annuity in a tax sheltered IRA. That's double kill.

Stick with the mutual funds and consider staying with no-load. Fidelity, Vanguard, T Rowe Price, American Century and a few of the good brand names. Call all of them. It's a free call.

Bob

[JimMarch]

If the Jews, Christians and Muslims all believe Abraham was a man of God, is that prophet sharing?